The report from Javelin Strategy + Research could not be more ominous. Financial institutions, credit unions included, have dropped the ball with a huge market segment that simply overlooks them when it comes to digital bill pay.
Noted the Javelin report titled “2013 Online Banking and Bill Payment Forecast:” (Bill pay) adoption will remain unacceptably ﬂat through 2018 unless ﬁnancial institutions take action to upgrade services, counter misperceptions about paying bills at FIs, and speciﬁcally target 29 million Americans who are only one step away from paying bills at their bank or credit union.
“The priority list of holdouts is topped by a newly identified segment of nearly 11 million Digital Drifters, deﬁned as consumers who bank online and use mobile banking but do not pay bills at their primary FI,” the report said.
Mark Schwanhausser, director, Omnichannel Financial Services, at Javelin, said in an interview, however, that there are reasons for optimism. “If financial institutions do this right, they could add 29 million people as customers using bill pay.”
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What is intriguing about the 11 million Digital Drifters in particular is that while they do not pay bills using their financial institution’s digital tools, they do however pay bills at biller websites. At least 70% of them do, according to Javelin.
Javelin’s analysis of that behavior poses both an opportunity and a challenge to credit unions. The report noted: “Javelin’s analysis concludes these are generally younger, impressionable digital-minded consumers who could ‘drift’ into paying bills at their primary bank or credit union if offered a more compelling alternative.”
That, suggested Schwanhausser, is the big if. Is the alternative “more compelling?”
“It’s not about marketing better. It’s about improving your products,” said Schwanhausser.
Right now, these digital drifters say “financial institution bill pay is inferior,” said Schwanhausser.
As for the cure, Schwanhausser asked, “You need to offer tools that will satisfy them, especially mobile tools. They all have smartphones. This clock is ticking.”
“Your challenge,” said Schwanhausser, “is moving fast enough.”